Chapter 11, Problem 9P

To determine

whether fiscal policy was effcetive during the stagflation of 1970s in the US along with the reasons for the same.

Concepts Introduced Fiscal Policy- It is the government’s plan of action or strategy with respect to the public revenue and expenditure to influence the nation’s economy.

Stagflation- Stagnation implies low economic growth rates and high rate of unemployment in the economy. Inflation, on the other hand, a persistent rise in the prices over a given period of time. An economic phenomenon whereby the stagflation and inflation simultaneously define a country’s economy is called stagflation.